Tuesday, May 9, 2017
The Devolution of Healthcare Insurance
In a closed system, entropy (disorder) always increases. Once opened, the soda-pop loses its fizz.
Various strategies are employed to foster the illusion that this is not true. Costs are hidden. Firewalls are constructed. Rules are written. Narratives are controlled. At best, they can only slow down the inevitable.
Consider the probable "Devolutionary Trajectory" of healthcare insurance in the United States.
A healthy family in Wisconsin will pay an average of $15,000 a year in healthcare insurance premiums in 2017. Then they face a $7000 deductible before their insurance kicks in.
Because ACA does not allow "discrimination" due to existing preconditions, there is little bar to the family foregoing health insurance (saving $15,000 every year), only to sign up after one of the members receives an unfortunate diagnosis.
Because people are rational when it comes to their self interest, in a very short period the insurance pool will be completely devoid of healthy people and will only contain people with chronic, long-term, expensive conditions.
The premiums must rise to reflect this.
Then consider patients with chronic conditions that are not particularly expensive, conditions like simple diabetes. Because these patients will figure out that it is cheaper to forego the insurance and pay for their care out-of-pocket.
The premiums will rise to reflect the loss of the lower cost "chronic" patients. Those higher premiums will shave the next level of cost off the bottom of the shrinking pool.
Follow this train of thought to its logical conclusion and then take two steps back and re-adjust your focus......
The system I just described devolved to a pay-as-you go system (where we started from) except this system has vast layers of administrative overhead.
In which case even the afflicted would be farther ahead to pay their costs out-of-pocket.
The inescapable conclusion is that healthcare insurance system is in the process of committing suicide.